Is United Continental a Safe Investment?

With shares of United Continental (NYSE:UAL) trading around $40, is UAL an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

United Continental is a holding company and its principal wholly owned subsidiaries are United Air Lines and Continental Airlines. The company transports people and cargo through its mainline and regional operations; it also has contractual relationships with various regional carriers to provide regional jet and turboprop service branded as United Express. Companies and consumers worldwide look to travel at increasing rates since air travel is quicker and is becoming less expensive. As costs decrease and flights become more efficient, United Continental stands to see soaring profits as consumers and businesses look to travel more than ever.

United Continental intends to outsource about 600 positions in its systems at 12 airports across the U.S. The move will help the company to cut costs while improving earnings, which have plummeted in recent times when as rivals witness growth. The company employs about 87,000 workers. Although the company announced plans outsource more jobs, it also intends retake some previously outsourced positions. As such, the company will reclaim about 400 jobs at Denver, Honolulu, Dulles and Phoenix, according to a contract with workers union. The affected positions include baggage handlers, gate and ticket agents. The impacted airports are mostly served by United Express flights.